1. On Windows Server 2008 Install “Desktop Experience” Feature. This will install the “Web Client service. Keep it to Automatic and make sure its Started.

2-on windows 7 “Web Client service” installed by default. Change it from Manual to automatic start only.2. Use IE 8 32 bit version and browse the SP site and check the explorer view. By Default it will open IE 8 64 bit version which continues to give the error regardless the “Web Client” service being started.

Note:
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Note sure about the difference between this behaviour in IE 8 32 and 64 bit versions. But on both Windows server 2008 and Windows 7, both the versions are installed by default